How Does a ‘Protocol-to-Protocol’ Lending Agreement Differ from Holding a Third-Party Token?
A protocol-to-protocol (P2P) lending agreement involves one protocol depositing assets into another's lending pool, often for a negotiated, fixed rate. This is a direct financial relationship with specific terms.
Holding a third-party token is a passive investment, exposing the treasury to the full market and governance risk of the token. P2P lending is typically a lower-risk, more structured way to earn yield.
Glossar
Agreement
Context ⎊ Agreement, within cryptocurrency, options trading, and financial derivatives, signifies a legally binding or consensually established understanding defining obligations, rights, and responsibilities between parties involved in a transaction or contract.
Protocol
Framework ⎊ A protocol defines a set of rules and procedures governing how a system operates, ensuring consistent and predictable interactions between participants.
Direct Financial Relationship
Contract ⎊ A direct financial relationship signifies a bilateral agreement between two specific counterparties, such as an over-the-counter (OTC) derivative trade or a peer-to-peer (P2P) loan, without the intermediation of a central clearing house or automated market maker.